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NASHUA — Frustrated that a local sporting goods company lost a contract bid with the Nashua School District because of a $1 difference, a city alderman is proposing an ordinance that would give preference to local vendors.

Alderman Ken Siegel, Ward 9, has drafted an ordinance that — if approved by the full Board of Aldermen — would establish a local preference factor to be used when awarding bids.

“This legislation helps recognize the value of relationships with local vendors and ultimately benefits the city by saving money and providing better service,” Siegel said on Thursday. “I think it is important to recognize that there are costs associated with purchases that aren’t strictly related to the purchase price.”

Siegel said there are sometimes disadvantages to awarding non-local vendors, even though their contract price may be less than a local company. By favoring Nashua businesses, shipping concerns no longer have to be considered, and the chance for a response or correction to an issue will likely be quicker if the company is local, he said.

When M&N Sports of Nashua recently lost a contract with the Nashua School District because an outside firm provided a quote that was $1 less, Siegel said he was outraged.

While the proposed city ordinance would not affect school purchasing, Siegel said his suggestion is a step in the right direction.

The aldermanic Finance Committee on Wednesday supported the ordinance, recommending that the Board of Aldermen approve the document.

“I learned a valuable lesson to stay in town and spend our money in town,” said Alderman David Deane, president of the Board of Aldermen. In dealing with a previous screen-printing order, Deane said he opted for a non-local company, and the work wasn’t completed correctly, forcing him to seek out a local business to fix the problem.

Mayor Donnalee Lozeau said the city has a reputation for selecting local companies if the bids are relatively close; however, she said there is no ordinance in place requiring the local preference.

“I think it is a real struggle,” she said, admitting there have been discussions about the issue in recent years.

According to Siegel’s proposal, which is being co-sponsored by three other aldermen, a local preference would be applied to all requests for bids, proposals and quotes for the purchase of goods or services, or for the award of concession contracts.

The preference factor will essentially reduce a local bid by 5 percent if the contract is for less than $10,000, and reduce a local bid by 3 percent if the contract is for more than $10,000.

For instance, if there was a local bid of $1,000 for shoes, and a non-local bid of $980 for the shoes, the local preference factor could be applied and the local bid would be reduced by 5 percent, to $950. In that scenario, the local vendor would win the contract, said Siegel.

“Local preference for bidders or products may be given only when there is no sacrifice or loss in quality,” states the proposal.

There is a provision that states local preference will not be applied to any contract associated with federal or state funds.

The city’s purchasing manager, Robert Gabriel, said he personally favors using local companies, and previously tried drafting a similar ordinance but stopped short of placing a dollar amount on the document.

“I am conflicted,” said Gabriel, who believes the proposal could be complicated, but possible.

Specifically, Gabriel said a local preference ordinance may not encourage competition, and it could face legal challenges.

“I agree, we wouldn’t want to get ourselves into a court situation,” Siegel told the Finance Committee on Wednesday. Still, he said that the ordinance was drafted with assistance from the city’s legal department, which spent significant time researching the matter.

In addition, he said the proposal is based on similar local preference ordinances from other communities that have survived legal challenges. Siegel said the city might be open to fewer legal battles if the ordinance was in place and companies fully understood the process upfront.

It may also encourage non-local vendors to produce lower bids for services, added Siegel.